TI misses Street targets and warns on Japan

By IBT Staff Reporter On 04/18/11 AT 7:56 PM

Texas Instruments Inc warned of slower-than-typical quarterly sales growth as it scrambles to restart production after Japan's massive earthquake, and said it was unclear when the supply of the silicon and wafers it needs will return to normal.

Shares of the chip maker, which plans to buy National Semiconductor Corp for $6.5 billion in a bid to expand its hold over a booming analog chip market, slid 2.5 percent after TI earnings were also hurt by quake-related expenses.

Chief Financial Officer Kevin March told Reuters TI was projecting growth of about 5 percent for the current quarter, versus a typical 9 percent or more as the company contends with supply shortages as well as damage to its own factories.

It's a knock-on effect you've going on here, March said. We're mindful that the actual raw silicon and wafers we'd use in our factories, a lot of those are manufactured in the earthquake zone.

TI on Monday forecast second-quarter earnings of 52 cents to 60 cents per share on revenue of $3.41 billion to $3.69 billion. Analysts had expected revenue of $3.52 billion.

Its first-quarter earnings also missed Wall Street expectations by a penny, as expenses rose after two of its Japanese factories were damaged in the country's largest earthquake on record.

TI said March 14 it would face a hefty repair bill, and warned its first- and second-quarter revenue would be hurt by production interruptions from damage and power-supply disruptions at two key factories in Japan.

The company said one of its factories will soon resume full production, and forecast a strong second half of the year.

They still were weak even without Japan. Sounds like their costs are rising a bit faster than their revenue, said Charter Equity Research analyst Ed Snyder.

The maker of chips used in products ranging from consumer electronics to industrial equipment forecast a profit of 52 to 60 cents per share in the current quarter.

Profit in the first quarter rose to $666 million, or 55 cents per share, from $658 million, or 52 cents per share, in the year-ago quarter.

Excluding 2 cents per share in costs associated with the quake, its earnings of 57 cents per share were just a penny below Wall Street expectations, according to Thomson Reuters I/B/E/S.

Revenue rose 6 percent to $3.39 billion from $3.21 billion, in line with the average analyst expectation for $3.39 billion.

Shares in TI slid nearly 3 percent before paring loses to about 2.5 percent, and traded at $33.90 after hours.